SF pension board votes to divest from five fossil fuel...

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2of 31John Hess, CEO of Hess Corp.Photo: Elizabeth Conley, Staff

3of 31A rig drilling an oil well for QEP Resources Inc., is shown on ranchland a few miles west of Cheyenne, Wyo., Thursday Sept. 30, 2010. More oil rigs are popping up around Cheyenne and some new wells 50 miles north of town might already be producing oil from the Niobrara Shale. The Wyoming Oil and Gas Conservation Commission has issued permits for more than 50 oil wells in northern Laramie County and southern Goshen and Platte counties so far this year. Dozens of those wells are now marked "confidential" on the production information page on the commission website.Photo: AP

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23of 31Dannine AvaraForbes Overall Rank: No. 215
Net Worth: $6.3 billion
Age: 50
Source of Income: One of four children to inherit the fortune of father Dan Duncan, an energy pipeline magnate who was the former richest man in Houston.
Country: United StatesPhoto: BRETT COOMER, SPECIAL TO THE CHRONICLE

24of 31Scott DuncanForbes Overall Rank: No. 215
Net Worth: $6.3 billion
Age: 31
Source of Income: One of four children to inherit the fortune of father Dan Duncan, an energy pipeline magnate who was the former richest man in Houston.
Country: United States
*No photo availablePhoto: fonikum, Getty Images

25of 31Milane FrantzForbes Overall Rank: No. 215
Net Worth: $6.3 billion
Age: 44
Source of Income: One of four children to inherit the fortune of father Dan Duncan, an energy pipeline magnate who was the former richest man in Houston.
Country: United States
*No photo availablePhoto: fonikum, Getty Images

26of 31Randa WilliamsForbes Overall Rank: No. 215
Net Worth: $6.3 billion
Age: 52
Source of Income: One of four children to inherit the fortune of father Dan Duncan, an energy pipeline magnate who was the former richest man in Houston.
Country: United StatesPhoto: Family photo

28of 31Ray Lee HuntForbes Overall Rank: No. 253
Net Worth: $5.6 billion
Age: 71
Source of Income: Chairman and CEO of Hunt Consolidated. Hunt Oil is one of the largest privately-held oil companies in the U.S. Sold a one-third stake in Eagle Ford shale in Texas for $1.3 billion in 2011. Also has various real estate interests.
Country: United StatesPhoto: YASSER AL-ZAYYAT, AFP/Getty Images

The board of the San Francisco Employees’ Retirement System has voted unanimously to divest from five fossil fuel companies.

The vote called for divestment from Hess Corp., Gulfport Energy Corp., QEP Resources Inc., WPX Energy Inc. and Apache Corp. because of their “high climate transition risk.” Additionally, it restricts future investment in two other companies, Crescent Point Energy and ARC Resources, though the pension fund currently is not currently invested in them.

The companies’ approach to climate policy, as well as their fossil fuel reserves and overall financial health, contributed to the decision to classify them as high-risk.

Andrew Collins, the retirement system’s director of environmental, social and governance investing, cited the five companies’ “risky reserves in their pipeline” and “poor financial performance measured by their solvency risk” during the Oct. 10 meeting, when the divestment decision was made.

The pension fund has $10 million of net exposure to the five companies and $8.5 million in exposure that would be divestable, meaning that the money is not in a co-mingled account, Collins said.

The board also told SFERS staff to put a number of other companies on a “watch list,” meaning the board could vote to divest from them if they don’t engage with the pension board over the next few years — meaning, in part, keeping the board informed about what they're doing on climate change.

Environmental activists have pressured SFERS and other pension funds to stop investing in oil, natural gas and coal companies in favor of renewable energy. Some have done so, at least partially. The SFERS board is legally required to make sure the fund has the best results for the former and current city employees who rely on it.

“We’ve done a lot in terms of the percentage of our assets that we’ve allocated toward these strategies. We can certainly do more, we can do more around climate risk ... but there’s some great investor coalitions that we’re already part of that we can be a part of more,” Collins said.

SFERS board president Brian Stansbury said during the meeting that two of the companies the board voted to divest from, Hess Corp. and WPX Energy, had seen their stock rise more than 50 percent and 73 percent respectively in the past year.

“All divestment actions that we take, or restrictions, we need to track and we need to know how much it’s making the system or costing the system,” Stansbury said. “These stocks that we’re going to be getting rid of had we done it a year ago, we would’ve lost millions of dollars on it. And that’s a reality that this board needs to be aware of. Someone’s going to have to make up that shortfall somewhere.”

Sophia Kunthara is a Hearst Journalism Fellow on the business desk. She's a two-time graduate of Arizona State University and spent the first year of the fellowship with the Connecticut Post covering breaking news and local government. Sophia has interned at The Arizona Republic, NBC Los Angeles and Reuters, and her hobbies include keeping up with the latest memes on Twitter and going to concerts.